[At-Large] [BMSPC-2020] Board seat 15 selection

[Karl Auerbach]

On 11/22/19 2:32 AM, Evan Leibovitch wrote:
> The  sad truth is that ICANN (and as we've found out recently, ISOC) 
> have no actual external stakeholders. In a for-profit the fiduciary 
> duty is to stakeholders. In a normal nonprofit the fiduciary duty is 
> to the stakeholders. In ICANN and ISOC, there is no external 
> accountability so the fiduciary duty is soley to the institution 
> itself. If this is an innovation of governance it's one I can do without.

Wow, you, Alan, and I all in general agreement!  This is a rare (and 
positive) event that ought to occur more often.  ;-)

One minor nit.  In a regular corporation the duty of directors is to 
take actions (or refrain from actions) with the goal of improving the 
corporation.  What that means is as vague as it sounds.  But it does not 
mean what some have described as "increasing shareholder value", 
although that can certainly be a consideration.

In a public-benefit/non-profit such as ICANN is under California law the 
duty of directors is slightly different.  Again the goal is to act (or 
not act) in order to benefit the corporation.  But the measure in this 
case must necessarily include consideration of how the public benefits 
from that act/non-act.  In other words, a director's duty must ask how 
well the corporation is acting to benefit the public.   That's also a 
quite vague standard.  And the sense of "public" is broad, in that it 
means the entire public not just a narrow selection of "stakeholders".

Yeah, this seems hyper technical and, at the same time, very vague.  But 
the distinctions are important and need to be recognized as part of the 
calculus that directors have to use when making decisions even if at the 
end the result in a given decision are the same.

Directors of non-profits are under great personal risk (to their 
personal assets) should they fail to exercise these duties.  (Some 
rules, such as the US IRS's rule about "intermediate sanctions" are 
utterly Draconian.)  As a board member in ICANN and elsewhere I find it 
useful to go through a little process in which I write down, in a ledger 
or in the minutes, the reasoning for any particular decision, revealing 
the evidence, the criteria used to measure that evidence.  That creates 
a thing called a "business judgement" which can not only be a defense 
but also tends to induce better decision making.

         --karl--